India-US Trade Talks Hit Another Roadblock Over Tariffs and Russian Oil

Synopsis

The talks to finalise an India-U.S. trade deal have stalled. A deal is not in the offing yet, said US Trade Representative Jamieson Greer last week and Finance Minister Nirmala Sitharaman said on Monday that talks have hit a stalemate. A new U.S. law that imposes up to 100% tariffs on big buyers of Russian oil has limited the margin for negotiation, and farm protection is a concern in New Delhi.

Finance Minister Nirmala Sitharaman has said the trade talks with the United States are at a "plateau" and "concessions" may be "difficult" on Monday.

Her comments came after a careful analysis by the capital. The United States Trade Representative Jamieson Greer on 30 September indicated that talks were not imminent, due to disagreements on priority items.

Piyush Goyal, Commerce Minister, had met Mr Greer at the G20 trade Ministerial. In a social media post, Mr. Goyal said that the talks focused on the early conclusion of a mutually beneficial interim agreement, under the India-US Bilateral Trade Agreement.

The Russian oil issue

There was less room for negotiation when President Donald Trump signed into law a Congressional measure granting him 100% tariff powers against nations that purchased substantial quantities of Russian oil such as India and China. No duties imposed by law on Indian goods.

Last August, the US had imposed a punitive duty of 25% on Russian oil purchases in addition to the 25% duty it had earlier imposed on all India's imports, raising the total duty to 50%. In February, it was lowered to the 18% duties.

India does not agree with Mr. Trump's reasoning that it agreed to halt Russian crude purchases because of India's energy security concerns. The conflict with Iran has jeopardised India's energy security and compelled India to import more of Russian oil.

Part of the US Trade Act of 1974, Section 301, is a measure that allows the United States government to investigate trade practices of other nations and impose trade restrictions if necessary. One of the unanswered issues is a Section 301 investigation of alleged industrial overcapacity.

Stalling issues: farm protection etc

Experts say that Russia's oil imports into India is a sore spot for Washington, and a concern for New Delhi to protect the politically sensitive agricultural industry and special price advantages it enjoys over other countries. In addition to the Section 301 probe, the two sides have agreed on a "universe of items" that is yet to be resolved, reports Outlook India.

Why it matters

The USA is India's biggest export partner. Reducing Russian oil imports could lead to higher fuel prices or place a burden on the government finances, while maintaining imports could harm exports, which poses a “tough energy-policy dilemma” for New Delhi.

What next

Further talks can be held if US Secretary of State Marco Rubio visits India later this month, Modern Diplomacy reported. There is no confirmation of this visit in the sources consulted from either side.